NZ Trust Income Tax Calculator
Compare the 39% trustee rate against distributing to beneficiaries at their personal marginal rates. See how much tax a family trust can save by distributing to lower-income family members.
Enter each beneficiary's other income (salary, wages, etc.) and the amount to distribute from the trust.
Beneficiary 1
How Trust Tax Works in New Zealand
From 1 April 2024 (tax year 2024-25), trustee income retained in a NZ discretionary family trust is taxed at a flat 39%. This is income that is not distributed to any beneficiary within the tax year.
Beneficiary income — income distributed to beneficiaries — is taxed at the beneficiary's personal marginal rate. NZ personal rates range from 10.5% to 39%, so distributing to lower-income family members (children, students, retired parents) can significantly reduce the overall tax bill.
The key question is: does distributing save more in tax than any complexity costs? Use this calculator to model different distribution strategies across up to four beneficiaries.
Example: $100,000 of trust income
- All retained: $100,000 × 39% = $39,000 tax
- Distributed equally to 2 adult children (no other income): $50,000 each → ~$8,020 each = $16,040 total tax
- Saving: $22,960
Distribution Strategy Tips
- 1. Prioritise low-income beneficiaries. Distributing to beneficiaries with little or no other income maximises the tax saving, as more of the distribution falls in the 10.5% and 17.5% brackets.
- 2. Avoid distributing to those already at 39%. If a beneficiary's total income exceeds $180,000 including the distribution, the marginal rate is 39% — the same as retaining, so no saving is achieved.
- 3. Watch income attribution rules. IRD's associated person attribution rules can claw back tax savings where distributions are effectively income of the settlor or their spouse/partner. Get tax advice before implementing a trust distribution strategy.
- 4. Distributions must be made or allocated by 31 March. Beneficiary income must be allocated within the tax year (by 31 March) to be taxed at the beneficiary's rate rather than the trustee rate.
Frequently asked questions
What is the trustee tax rate in New Zealand?
From the 2024-25 tax year (1 April 2024 onwards), trustee income retained in a trust is taxed at a flat 39% rate. This matches the top personal income tax rate and was changed to prevent high-income individuals using trusts to shelter income.
Can distributing trust income to beneficiaries save tax?
Yes — if a beneficiary has a marginal income tax rate below 39%, distributing trust income to them will be taxed at their personal rate rather than the 39% trustee rate. For example, distributing $50,000 to a beneficiary with no other income results in tax of around $8,020 (effective 16.0%), saving over $11,000 compared to the 39% trustee rate.
What is beneficiary income from a trust?
Beneficiary income is trust income that is distributed to a beneficiary (paid or allocated to them) within the same tax year. It is taxed at the beneficiary's personal income tax rate, just like salary or wages. The trustee must allocate beneficiary income by the end of the tax year.
Is there a saving when the beneficiary is also in the 39% bracket?
No. If the beneficiary's total income (including the distribution) is taxed at 39%, there is no saving from distributing. The distribution tax equals the trustee tax. Distributions only save tax when the beneficiary is in a lower bracket (below $180,001 combined income).
Why was the trustee tax rate increased to 39%?
Prior to 2024-25, trustee income was taxed at 33%, creating an incentive for high earners (in the 39% bracket) to shelter income in family trusts. The Government increased the trustee rate to 39% to align it with the top personal rate and remove this incentive.
How many beneficiaries can a New Zealand family trust have?
There is no legal limit on the number of trust beneficiaries in New Zealand. Family trusts commonly have a class of beneficiaries including the settlors, their children, and grandchildren. However, the ability to distribute to multiple beneficiaries to split income below the 39% threshold is limited by IRD's income attribution rules for associated persons.
Sources
Trust tax rules from IRD — Income Tax for Trusts. Tax rates from IRD — Tax Rates for Individuals.
Related Calculators
Last updated March 2026. Trust tax rates sourced from IRD. This calculator provides general guidance only — seek professional tax advice for your specific situation.